The movement in gold prices in India is largely dominated by fluctuations in world markets. In the benchmark London spot market, gold was trading at $1,361 an ounce (28 gm) in early trade on Friday afternoon. This is the highest level since August 2016.
Investors are booking gold after the collapse of cryptocurrencies such as bitcoin.
“There has been a confluence of factors supporting the rise in gold prices, which remained low for more than a year. The US interest rate hike, which kept gold prices subdued over the last one year, has started working in its favour due to inflationary pressure. Thanks to bitcoin’s decline, the investment demand has returned. Additionally, a weaker dollar has also helped gold’s upward move. We see gold’s immediate resistance at $1,375 an ounce and thereafter $1,430 an ounce,” said Gnanasekar Thiagarajan, director, Commtrendz Research.
The fundamentals are supporting the rise in gold prices. The data compiled by the World Gold Council (WGC) showed a 6 per cent increase in the global gold demand during the October-December quarter to 1,095.8 tonnes.
Global exchange-traded funds (ETFs) added 202.8 tonnes in 2017.
“Gold prices are likely to gain $80 more in the next couple of months due to a sustained depreciation in the US dollar,” said Kishore Narne, associate director (commodity and currency), Motilal Oswal Financial Services Ltd.
Meanwhile, the rise in gold prices has reduced fresh purchases of jewellery.
“Scattered orders are coming in only through monthly deposit schemes or re-melting of scrap jewellery. Consumers seem to be fearing the government’s monitoring authorities. We expect this wedding season to remain lacklustre,” said Kumar Jain, director, Umedmal Tilokchand Zaveri, a bullion dealer and jewellery retailer in Zaveri Bazaar.
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